UAE builders keep projects on track

Real estate developers across the UAE are sticking to original construction and launch schedules despite a regional war that has lifted energy and materials costs, with industry participants signalling that any easing in prices and transaction volumes is more likely to be temporary than structural while the conflict runs on. Market activity has slowed in parts of the sector, but there has been no broad retreat from project delivery or fresh launches.

The conflict involving the United States, Israel and Iran began on February 28, according to Reuters and other widely used market reporting, and its economic effects have spread quickly through oil, gas and shipping markets. The Strait of Hormuz, a key artery for global crude and liquefied natural gas flows, has been severely disrupted, sending energy prices higher and tightening financial conditions well beyond the Gulf. Reuters reported on April 2 that Brent crude had jumped to about $108 a barrel after President Donald Trump said US attacks on Iran would continue, underscoring the uncertainty hanging over regional business sentiment.

Against that backdrop, UAE developers have carried on announcing projects and awarding contracts through the first quarter of 2026. Market participants cited by Zawya said groups including Dubai Investments, Azizi, Modon and Arada had continued to move ahead, even as expectations grew for a softer trading environment until hostilities subside. That distinction is important: the outlook being discussed by stakeholders is not one of a frozen market, but of more measured pricing and volumes after a long stretch of unusually strong expansion.

Dubai offers the clearest signal of that resilience. Zawya, citing analysis of Dubai Land Department data by real estate platform Al Masdar Al Aqaari, said off-plan residential apartment sales in March reached AED17.5 billion, up 12.9 per cent from a year earlier. At the upper end of the market, appetite has also held, highlighted by the sale of an Aman Residences Dubai penthouse for AED422 million in early March, one of the costliest apartment deals recorded in the emirate. These transactions suggest that wealthy overseas buyers and long-term investors are still prepared to deploy capital in prime assets despite geopolitical turbulence.

Official messaging from Dubai’s property authorities also points to a market that remains institutionally strong. Dubai Land Department said in January that the sector recorded AED761 billion in transactions in 2024, with sales volumes and values rising sharply year on year. More than that, the regulator has continued to push ahead with market-development initiatives this year, including the second phase of its tokenisation project and broader PropTech efforts, indicating that policymakers are still operating on the basis of expansion, transparency and market deepening rather than crisis management.

Developers and advisers nevertheless see the pace of growth cooling. Ajay Rajendran of Meraki Developers said the market has matured and is less reactive to short-term geopolitical shocks than in earlier cycles, while also arguing that growth is likely to normalise this year. Another market participant, Zhou Yuan of Tomorrow World Properties, said activity could moderate through the rest of 2026 depending on how the regional situation evolves. That points to a more selective buyer base, one increasingly focused on build quality, location and delivery credibility instead of short-term speculation.

Underlying demand drivers still appear intact. The UAE’s long-term residency framework, including the Golden visa for investors and professionals, continues to support the country’s appeal to foreign buyers, entrepreneurs and high-skilled residents. The government’s residence and property-linked visa pathways have become an important pillar of the housing story because they tie real estate demand not only to investment returns, but also to lifestyle, business relocation and wealth preservation. Those structural factors help explain why developers are showing little appetite to delay projects purely because of near-term volatility.

There are, however, clear risks if the war drags on. Reuters reported that the IMF sees the conflict as a global shock that leads to higher prices and slower growth, while the International Energy Agency has warned that the disruption to oil markets is historically severe. Higher fuel and commodity costs can feed directly into construction budgets through transport, petrochemicals, steel, cement and contractor pricing. Even if developers keep schemes on schedule, margins could come under pressure and purchasers may turn more cautious if household and financing costs rise.